Correlation Between Quanta Services and Cadeler AS

Can any of the company-specific risk be diversified away by investing in both Quanta Services and Cadeler AS at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Quanta Services and Cadeler AS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Quanta Services and Cadeler AS, you can compare the effects of market volatilities on Quanta Services and Cadeler AS and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Quanta Services with a short position of Cadeler AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quanta Services and Cadeler AS.

Diversification Opportunities for Quanta Services and Cadeler AS

-0.81

Correlation Coefficient

Quanta Services  Cadeler AS

Pay attention - limited upside

The 3 months correlation between Quanta and Cadeler is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Quanta Services and Cadeler AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadeler AS and Quanta Services is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Quanta Services are associated (or correlated) with Cadeler AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadeler AS has no effect on the direction of Quanta Services i.e., Quanta Services and Cadeler AS go up and down completely randomly.

Pair Corralation between Quanta Services and Cadeler AS

Considering the 90-day investment horizon Quanta Services is expected to generate 1.31 times more return on investment than Cadeler AS. However, Quanta Services is 1.31 times more volatile than Cadeler AS. It trades about -0.11 of its potential returns per unit of risk. Cadeler AS is currently generating about -0.23 per unit of risk. If you would invest  34,292  in Quanta Services on September 24, 2024 and sell it today you would lose (1,451) from holding Quanta Services or give up 4.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Quanta Services  vs.  Cadeler AS

Quanta Services

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quanta Services are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Quanta Services may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Cadeler AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cadeler AS has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's essential indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Quanta Services and Cadeler AS

The main advantage of trading using opposite Quanta Services and Cadeler AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quanta Services position performs unexpectedly, Cadeler AS can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Cadeler AS will offset losses from the drop in Cadeler AS's long position.

The idea behind Quanta Services and Cadeler AS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.